CSFB analyst warns of lower Ipod availability ahead of refresh

Posted July 12, 2006 - 19:34
by
Scott M. Fulton, III

New York (NY) -Reuters reports this afternoonthat, in a statement issued today, Credit Suisse First Boston analyst Robert Semple warned that Apple could be reducing its inventories of current models of iPod players, in advance of a refresh of the product line, which he expects to see in September or October.

The news sent Apple stock value plunging once again, this time to nine-month lows, trading at about $53 / share at 3:15 ET this afternoon, down 4.76%. But buried amid the bad news was Semple's prediction that the next generation iPod would be released during the timeframe originally anticipated. Two weeks ago, AmTech analyst Shaw Wu's prediction that new 4 GB and 8 GB editions of the iPod nano would be delayed past that time, started Apple stock value plunging the first time around.

Technically, if Apple were to delay its new iPods, it wouldn't need to tighten shipments of the current generation, which is what Semple predicted. While both predictions are negative, the good news for Apple is they cannot co-exist.

However, the end damage would be about the same, with Semple reducing his profit projections for Apple's fiscal fourth quarter to 50¢ per share from 52¢, and reducing his revenue forecast for the quarter by $200 million to $4.6 billion.

Semple follows the history of iPod quite closely, reporting last May that, while Apple sold 50 million iPods in half of the decade required for Sony to sell 50 million Walkmans, his firm was still concerned about the fact that only 10.3% of the installed base of personal computers appeared to be attached to iPods. On the one hand, Apple could view the remaining 89.7% as a new frontier for iPod to conquer; on the other, a competitor with a foothold in computing could conceivably leverage that position to increase its stake in music players.

If you're thinking Microsoft...you're wrong. Semple was actually thinking Sony, given its stronger history in consumer brands, along with its PC presence. But even then, Sony could possibly attain a strong second-place position in Semple's view last May; he doesn't believe Apple's #1 position could be upset anytime soon. Semple's statement today reportedly narrows CSFB's near-term outlook on Apple stock to "highly volatile," while reiterating its long-term outlook rating as "outperform." Apple will announce its fiscal fourth quarter results next Wednesday.